One of the provisions of the Patient Protection and Affordable Care Act (ObamaCare) requires insurance companies to spend 80% of premiums they collect from small employer groups on claims. The figure for large employer groups is 85%. All other administrative expenses must be paid out of the remaining funds, referred to as the Medical Loss Ratio (MLR).
On the surface this seems to make sense and can be viewed as fair to all participants of these health insurance plans. But as the saying goes “the devil is in the details”.
A major problem/issue is that the law requires agent compensation to be part of the MLR, classifying it as an administrative expense. In order to comply, insurance companies were forced to cut agent compensation. In some cases, these cuts were up to 50%.
Now this makes no sense because ObamaCare created so much confusion, agents were inundated with questions from clients which necessitated much research to find answers. I can attest to this from my own experience. So at the very moment the government created more work for insurance agents and brokers, they effectively reduced their compensation.
Tell me how this makes any sense?
Hopefully, relief is in sight!
Two Congressman have introduced legislation that would exclude agent compensation from the MLR. The bill, the Access to Professional Health Insurance Advisors Act of 2011 has support from both sides of the aisle. It has been introduced by Reps. John Barrow (D-GA) and Mike Rogers (R-MI).
The bill is one of several attempts to free insurance companies from being forced to include agent compensation in their administrative costs. There is, of course, no guarantee that insurance companies will increase agent compensation if the law passed but it is a step in the right direction.
ObamaCare did not specify how to classify agent compensation under the MLR formula. However, through the regulatory process agent compensation was included in the MLR formula and also included as part of the “non-claims costs” category.
“Agent compensation is passed through by the insurance company from the consumer to the agent and is collected as part of the premium as a convenience,” says Robert Rusbuldt, president and CEO of the Independent Insurance Agents of America. “This compensation is not insurance company revenue and therefore should not be part of the MLR formula and the Rogers-Barrow legislation is a crucial technical fix to correct this error.”
If this issue is not addressed it can only cause harm to the consumer. Separately, many other insurance trade groups have been appealing for exemptions from the MLR calculations.
Hopefully, members of Congress will realize the value of this bill as the “status quo” is just not acceptable. According to a recent survey of 520 insurance agents conducted by the National Association of Insurance and Financial Advisors, 13% of agents experiencing reduced commissions have laid off or reduced the hours of support staff. Another 23% have considered staff reductions.
More than 25% say they will be forced to reduce staff in the future if commissions remain depressed.
Once again, the Obama administration and Congress, in spite of the claims that they are doing things to create jobs, propose and enact legislation that does just the opposite!
Monday, June 20, 2011
Monday, June 6, 2011
Are You Kidding Me?
In this past Sunday’s New York Times, Nicholas Kristof wrote an article entitled “Our Fantasy Nation?” His article centers on the desire of Tea Party conservatives and many Republicans to block the raising of the debt ceiling and offers an example of a nation that “lives up to their ideal”.
The nation he compares us to is Pakistan where he claims fewer than 2% of the people pay any taxes, government is limited and burdensome regulation never kills jobs. He further uses as examples of comparison that Pakistani society embraces traditional religious values, nobody objects to school prayer, same sex marriage is not imaginable and criminals are never coddled. Citizens are deeply patriotic and nobody burns flags.
And on this basis he concludes that the Republicans and Tea Party conservatives are moving America in the direction of Pakistan?
ARE YOU KIDDING ME?
Although he admits Sarah Palin and John Boehner do not intend to turn Washington into “Islamabad-on-the-Potomac” and that long-term budget issues need to be addressed (I assume he means by both Democrats and Republicans although he does not say this) he makes a very strong point that when Republicans insist on “starving the beast” of government, cutting taxes, regulations and social services, those are the steps to America becoming Pakistan.
ARE YOU KIDDING ME?
The rest of the article goes on to state how disastrous a Republican budget victory would be. For evidence he states the following:
history has taught us that government must take on more responsibility
citizens must pay more taxes
citizens of the Congo:
pay minimal taxes
there is high inequality
there is free-wheeling business and high military expenditures
the conclusion, I guess, is we are becoming like the Congo!
ARE YOU KIDDING ME?
And again we get the familiar argument that too much wealth is concentrated in too few hands, that the wealthiest 1% of Americans have greater net worth than the bottom 90%. Is this the fault of the wealthiest of our citizens?
ARE YOU KIDDING ME?
And if this were not enough nonsense, Mr. Kristof quotes G. Jeremiah Ryan, president of Bergen Community College in New Jersey. Mr. Ryan states that when the school was founded in 1965, two-thirds of the cost of running it was supposed to be paid by state and local governments and one-third by students. He goes on to say that today students bear 78% of the cost.
Is that the fault of the conservatives and Republicans? Perhaps that is not the conclusion that Mr. Kristof intended but the implication certainly is there. This is an example of the state government promising more than it could deliver, plain and simple. To imply otherwise is just not fair.
Yes, America is in an economic malaise and something must be done to spur employment, improve the housing market and aid the poorest of our citizens. It has been said that a society can be judged on how it treats its poor and I believe there is some truth to that.
But, in my opinion, the answer is not in government bailouts, re-distribution of wealth or taking from the rich to give to the poor. These are all the result of a president, and most who surround him, that is anti-business and believes all problems can be solved by taxing the rich.
I DISAGREE!
You really want to know why we have persistently high unemployment in excess of 9%?
You really want to know why we continue to have a lagging real estate market?
You really want to know why stock prices do not reflect growth in corporate profits?
It is because we have an administration that has an entitlement attitude. Mr. Obama and his supporters believe:
Re-distributing wealth is the answer to the nation’s economic woes
If you tax the “rich” enough, you have the solution to the nations’ economic woes
If you impose enough taxes on business - those dastardly hard-working Innovators who had the guts to start and attempt to grow a business - you will solve the nations’s economic woes
Growth of capital is not important
Mr. Obama and his administration are imposing on the American people social engineering at its worst. They display the attitude of the community organizer - look to the government to solve all problems. Turn the rich into the enemy. Blame successful businesses for all the nation’s ills.
Mr. Obama spent the first 2 years of his administration blaming everything on president Bush. He never acknowledge that by 2010, the Democrats had controlled Congress for 4 years! Then he discovered that government cannot do it all so he embarked on his campaign of soak the rich. How innovative!
We expect and deserve more from our president.
America will never return to greatness or realize its potential with an administration that pursues re-distribution of wealth and entitlement to the needy.
Businesses, both small and large, will not hire when they are unsure of what is the next piece of legislation that will adversely affect them and average workers are being hurt by this administration’s agenda.
Let me give you 2 examples.
In early 2009, the Obama administration passed the American Recovery and Reinvestment Act which came to be known as the ARRA law. One of its provisions required an employer to pay 65% of COBRA insurance premiums for 9 months for any employee terminated involuntarily. The Obama administration claimed that the expense would be offset by a payroll tax credit.
ARE YOU KIDDING ME?
This is an example of the empty-head thinking of administration officials who never ran a business, were never responsible for meeting a payroll and do not have a clue of what it takes to build a successful business.
Many small businesses did not have enough people remaining on payroll for the tax credit to offset the cost of the insurance premiums so it was a net loss to the business owner. The business owner was left holding the bag, including the expense of keeping track of all this and being penalized for this social legislation. I know this to be true for I was establishing COBRA administration plans for businesses and saw the devastating affect of this supposedly beneficial law. Time and time again I listened to business owners question how they could comply with all the new paperwork and the expense of that paperwork. And that, of course, is never considered by policy makers that have no business experience.
There was a ripple affect from this law. Companies like my former employer that did COBRA plan administration had to spend hundreds of thousands of dollars to communicate the provisions of this law to clients to be sure they were compliant. This all had a negative impact on the bottom line with absolutely no assistance from the government.
As a result, many businesses stopped hiring as times were so uncertain they did not want to face the prospect of paying COBRA premiums for additional involuntary terminations.
Another example.
Under “Obama Care” the ability of a worker to pay for over-the-counter drugs on a pre-tax basis as part of an employer sponsored flexible spending plan was eliminated. The administration justified this by saying mainly high income workers took advantage of this tax break.
ARE YOU KIDDING ME?
I can tell you from personal experience of establishing these pre-tax plans for many companies, many moderate income people participated. And since the amount of payroll being set aside for pre-taxing OTC medical expenses also gave a tax break to the employer, the elimination of this benefit also hurt the business owner.
This effectively RAISED the cost of OTC drugs for all flexible plan participants who could no longer take advantage of the tax break. Yet you never heard this from the Obama administration. All we heard is that Obama Care would REDUCE costs. How dishonest!
So, I submit that the Fantasy Nation is not what Mr. Kristof says the Republicans are moving us toward, it is the Nation we currently have!
The nation he compares us to is Pakistan where he claims fewer than 2% of the people pay any taxes, government is limited and burdensome regulation never kills jobs. He further uses as examples of comparison that Pakistani society embraces traditional religious values, nobody objects to school prayer, same sex marriage is not imaginable and criminals are never coddled. Citizens are deeply patriotic and nobody burns flags.
And on this basis he concludes that the Republicans and Tea Party conservatives are moving America in the direction of Pakistan?
ARE YOU KIDDING ME?
Although he admits Sarah Palin and John Boehner do not intend to turn Washington into “Islamabad-on-the-Potomac” and that long-term budget issues need to be addressed (I assume he means by both Democrats and Republicans although he does not say this) he makes a very strong point that when Republicans insist on “starving the beast” of government, cutting taxes, regulations and social services, those are the steps to America becoming Pakistan.
ARE YOU KIDDING ME?
The rest of the article goes on to state how disastrous a Republican budget victory would be. For evidence he states the following:
history has taught us that government must take on more responsibility
citizens must pay more taxes
citizens of the Congo:
pay minimal taxes
there is high inequality
there is free-wheeling business and high military expenditures
the conclusion, I guess, is we are becoming like the Congo!
ARE YOU KIDDING ME?
And again we get the familiar argument that too much wealth is concentrated in too few hands, that the wealthiest 1% of Americans have greater net worth than the bottom 90%. Is this the fault of the wealthiest of our citizens?
ARE YOU KIDDING ME?
And if this were not enough nonsense, Mr. Kristof quotes G. Jeremiah Ryan, president of Bergen Community College in New Jersey. Mr. Ryan states that when the school was founded in 1965, two-thirds of the cost of running it was supposed to be paid by state and local governments and one-third by students. He goes on to say that today students bear 78% of the cost.
Is that the fault of the conservatives and Republicans? Perhaps that is not the conclusion that Mr. Kristof intended but the implication certainly is there. This is an example of the state government promising more than it could deliver, plain and simple. To imply otherwise is just not fair.
Yes, America is in an economic malaise and something must be done to spur employment, improve the housing market and aid the poorest of our citizens. It has been said that a society can be judged on how it treats its poor and I believe there is some truth to that.
But, in my opinion, the answer is not in government bailouts, re-distribution of wealth or taking from the rich to give to the poor. These are all the result of a president, and most who surround him, that is anti-business and believes all problems can be solved by taxing the rich.
I DISAGREE!
You really want to know why we have persistently high unemployment in excess of 9%?
You really want to know why we continue to have a lagging real estate market?
You really want to know why stock prices do not reflect growth in corporate profits?
It is because we have an administration that has an entitlement attitude. Mr. Obama and his supporters believe:
Re-distributing wealth is the answer to the nation’s economic woes
If you tax the “rich” enough, you have the solution to the nations’ economic woes
If you impose enough taxes on business - those dastardly hard-working Innovators who had the guts to start and attempt to grow a business - you will solve the nations’s economic woes
Growth of capital is not important
Mr. Obama and his administration are imposing on the American people social engineering at its worst. They display the attitude of the community organizer - look to the government to solve all problems. Turn the rich into the enemy. Blame successful businesses for all the nation’s ills.
Mr. Obama spent the first 2 years of his administration blaming everything on president Bush. He never acknowledge that by 2010, the Democrats had controlled Congress for 4 years! Then he discovered that government cannot do it all so he embarked on his campaign of soak the rich. How innovative!
We expect and deserve more from our president.
America will never return to greatness or realize its potential with an administration that pursues re-distribution of wealth and entitlement to the needy.
Businesses, both small and large, will not hire when they are unsure of what is the next piece of legislation that will adversely affect them and average workers are being hurt by this administration’s agenda.
Let me give you 2 examples.
In early 2009, the Obama administration passed the American Recovery and Reinvestment Act which came to be known as the ARRA law. One of its provisions required an employer to pay 65% of COBRA insurance premiums for 9 months for any employee terminated involuntarily. The Obama administration claimed that the expense would be offset by a payroll tax credit.
ARE YOU KIDDING ME?
This is an example of the empty-head thinking of administration officials who never ran a business, were never responsible for meeting a payroll and do not have a clue of what it takes to build a successful business.
Many small businesses did not have enough people remaining on payroll for the tax credit to offset the cost of the insurance premiums so it was a net loss to the business owner. The business owner was left holding the bag, including the expense of keeping track of all this and being penalized for this social legislation. I know this to be true for I was establishing COBRA administration plans for businesses and saw the devastating affect of this supposedly beneficial law. Time and time again I listened to business owners question how they could comply with all the new paperwork and the expense of that paperwork. And that, of course, is never considered by policy makers that have no business experience.
There was a ripple affect from this law. Companies like my former employer that did COBRA plan administration had to spend hundreds of thousands of dollars to communicate the provisions of this law to clients to be sure they were compliant. This all had a negative impact on the bottom line with absolutely no assistance from the government.
As a result, many businesses stopped hiring as times were so uncertain they did not want to face the prospect of paying COBRA premiums for additional involuntary terminations.
Another example.
Under “Obama Care” the ability of a worker to pay for over-the-counter drugs on a pre-tax basis as part of an employer sponsored flexible spending plan was eliminated. The administration justified this by saying mainly high income workers took advantage of this tax break.
ARE YOU KIDDING ME?
I can tell you from personal experience of establishing these pre-tax plans for many companies, many moderate income people participated. And since the amount of payroll being set aside for pre-taxing OTC medical expenses also gave a tax break to the employer, the elimination of this benefit also hurt the business owner.
This effectively RAISED the cost of OTC drugs for all flexible plan participants who could no longer take advantage of the tax break. Yet you never heard this from the Obama administration. All we heard is that Obama Care would REDUCE costs. How dishonest!
So, I submit that the Fantasy Nation is not what Mr. Kristof says the Republicans are moving us toward, it is the Nation we currently have!
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